Think about it, ALL startups in the silicon valley, COMBINED (even with Facebook's 15 billion evaluation), are not worth not even 10% of the 530 billion dollars a year that is the defense budget.
You're comparing the valuations of software startups with the entire operating budget of the military? You first need to discount salary, equipment, maintenance, etc, all costs not relating directly to software.
A more realistic comparison would be comparing the defense budget to the entire economic output of the bay area. Even then it's apples and oranges.